Scarborough project cost estimate increases

Refreshed pricing from major contractors underpins the updated cost estimate. The updated cost estimate is US$12 billion (100% project, nominal), comprising US$5.7 billion for the offshore component and US$6.3 billion for the onshore component.

The cost estimate is approximately 5% higher than the previous cost estimate announced in November 2019 and incorporates:

• An approximately 3% cost increase in the onshore component, including modifications to Pluto Train 1 to enable processing of Scarborough gas.
• An approximately 8% increase in the offshore component, including an increase in offshore production capacity from 6.5 million tpy to 8 million tpy of LNG and an additional well.

The expected internal rate of return (IRR) of the integrated Scarborough and Pluto Train 2 development is greater than 12%. It has a globally competitive cost of supply of approximately US$6.8/MMBtu to north Asia and is targeted to deliver the first cargo in 2026 into a market with anticipated robust demand for LNG.

Woodside Acting CEO Meg O’Neill said: “Significant progress has been made towards our targeted final investment decision on Scarborough and Pluto Train 2 this year.

“The cost update includes value-accretive scope changes to deliver an approximately 20% increase in offshore processing capacity and to modify Pluto Train 1 to allow increased Scarborough gas processing. It also reflects the work undertaken with our contractors to optimise the execution schedule and manage costs in preparation for FID.

“Woodside’s contracting strategy for Scarborough reduces cost risk, with approximately 90% of total project contractor spend structured as lump-sum and fixed rate agreements.

“We have commenced the formal processes for selling down our interest in Pluto Train 2 and Scarborough as we target the investment decision later this year and these processes are supported by the updated cost estimate,” she said.

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